Today’s Forex Guide

Republicans win; Oil Drops


Nov.05.2014

Let's get a bit political today. Even though the following comparison chart from Bloomberg shows that democrats are probably a better choice for the American economy in general, the US dollar and the US stock market rose today after a sweeping Republican party won in U.S. mid-term elections. Ms. USA was pushed to a seven-year high against Mr. Japanese yen and lifted U.S. stock futures on Wednesday. More soft data from China left oil at its lowest in four years.   Financial markets saw the election results as a cause for optimism. Similar situations in the past have often sparked U.S. stock market rallies.

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For all my oil-lover followers, here is an overview as to why oil could continue to go down:

1-      US dollar and oil prices are reversely correlated

If you are foreseeing more uptrend in the US dollar, you could normally sit down and have a bearish outlook on oil prices.  When the dollar strengthened, oil prices would fall — and vice versa.

For the longest time, this relationship has been explained by the huge flow of US oil imports. However according to an article on Business Insiders, during 2008 - 2014 time period there's been a huge reduction in correlation between oil prices and the US dollar, so we still need more evidence before putting all our eggs in one basket.

 

2-      Saudi Arabia to cut oil futures prices

they announced their decision just when it seemed that oil had reached a bottom. Saudi Arabia is the world’s largest crude oil exporter so its move to reduce its selling prices to the U.S. pushed oil prices below $76 per barrel – its lowest level since October 2010.

3-    Russia’s problems continue to contribute to weaker oil prices

Remember all the issues with Russia and Ukraine and all the sanctions? The U.S. and Europe made a joint effort back in July to add pressure on Russia’s oil production by restricting access to Western funding and technology? That would allow the country to tap into Artic deep sea and shale oil reserves.

With that, Russia’s oil production companies were forced to make spending cuts and search for cheaper sources.

 

 

Intraday Forex Technical Levels


EUR/USD 4-hour Forex Dance Floor
EUR/USD 4-hour: Consolidating.

Invest Diva Likes: Short positions below 1.2511 with targets at 1.2437 and 1.2376 in extension.

If Pair Goes Nuts: Above 1.2511 look for further upside towards 1.2604 and 1.2708.

What's up on the Forex Dance Floor: The pair remains on an overall downtrend but is now consolidating at the pivot level at 1.2511 below the Ichimoku's cloud. The RSI is moving below the neutrality area.

Supports and Resistances
1.2708

1.2604

1.2511 Pivot Point

1.2437

1.2376


GBP/USD 4-hour Forex Dance Floor
GBP/USD 4-hour: Completed a Double Top

Invest Diva Likes: Short positions below 1.5882 with targets at 1.5825 and 1.5719 in extension.

If Pair Goes Nuts: Above 1.5882 look for further upside towards 1.6025 and 1.6114.

What's up on the Forex Dance Floor: The pair dropped to complete a Double Top pattern and reached our previous bearish target at 1.5882 below the Ichimoku's cloud. The RSI is rebounding from the oversold zone.

Supports and Resistances
1.6114

1.6025

1.5882 Pivot Point

1.5825

1.5719


AUD/USD 4-hour Forex Dance Floor
AUD/USD 4-hour: Broke below a key support level

Invest Diva Likes: Short positions below 0.8659 with targets at 0.8502 and 0.8318 in extension.

If Pair Goes Nuts: Above 0.8659 look for further upside towards 0.8754 and 0.8828.

What's up on the Forex Dance Floor: The pair broke below a key support level and bearish target at 0.8659 and continues to drop below the Ichimoku's cloud. The RSI is moving below the neutrality area. Market sentiment of one of the largest international brokers shows that 31% of traders are short the pair and the combination of the technicals and current sentiment gives a further bearish bias.

Supports and Resistances
0.8828

0.8754

0.8659 Pivot Point

0.8502

0.8318


EUR/JPY 4-hour Forex Dance Floor
EUR/JPY 4-hour: Uptrend.

Invest Diva Likes: Long positions above 143.43 with targets at 145.03 and 146.80 in extension.

If Pair Goes Nuts: Below 142.25 look for further downside towards 141.23 and 139.87.

What's up on the Forex Dance Floor: The pair reached aprevious bullish target above the Ichimoku's cloud and remains on uptrend. The RSI is above the overbought zone.?

Supports and Resistances
146.80

145.03

143.43 Pivot Point

142.25

141.23

139.87

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